Amidst all the current uncertainty, it may be a comfort to know that despite the UK’s long-standing membership of the EU, property law in the UK has remained essentially national with, for the most part, little intervention from the EU. As a result, it looks as though Brexit will have limited impact on how UK property is owned or dealt with.
In particular, leaving the EU will not impact on the legal formalities relating to property ownership, land registration, leasing, or the taking of security over land in the UK. This body of land law, clear, stable and commercially orientated, has been developed over many years and it is this, coupled with a transparent system of registered ownership and investor-friendly leases, which makes English law so attractive for property investors. Brexit will not change this.
Brexit is also unlikely to have any impact on the property structures that are currently in use across the UK nor on their tax efficiency because, in general, these do not rely on EU legal principles.
In relation to completed or pending UK real-estate transactions, Brexit is unlikely to affect the substance of existing rights and obligations, and any contracts or agreements that have been entered into will remain in full force and effect unless, unusually, specific termination rights exist.
However there are some areas of EU law that do affect UK property transactions, in particular environmental legislation such as the Energy Performance of Buildings Directive that sets minimum energy performance requirements for new and existing buildings and requires the energy performance of buildings to be certified, and planning legislation such as the Environmental Impact Assessment Directive detailing the environmental impact assessments that are required for development projects.
The future status of UK law in these areas is uncertain and much will depend on the nature of our post-Brexit relationship with the EU. However, it seems unlikely that the UK will turn away from the clear and established principles that are currently in place, and probable that much of the legislation originating from the EU will be retained, especially in relation to environmental and planning matters – although there will be scope to take a further look at these controls, which may indeed improve the outlook for property development in the UK.
Aside from the legal issues Brexit is, of course, almost certain to have commercial implications and, although these are more difficult to predict, the value of some property investments could be affected, temporarily or otherwise, depending on the more general impact of Brexit on the UK economy.
Watch this space!
Robert Enticott. Partner & Head of Commercial Property.
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